Trade Measures to Combat IUU Fishing / by Francisco Blaha

A few days ago I reported on a publication by my friend Gilles, as it goes, another of his works, (also with difficult birth) was published on the same day. This one deals goes on a Comparative Analysis of Unilateral and Multilateral Approaches to combat IUU fishing.

Gilles been bussy

Gilles been bussy

Illegal, unreported, and unregulated (IUU) fishing is a persistent and global problem that undermines the achievement of sustainable fisheries, being fish one of the most valuable renewable resource commodities exploited today, and a significant proportion of global fish production enters international trade (particularly from developing countries to developed ones), makes sense that trade policy should have a role in addressing the problem.

His paper describes and compares the apparent impact of multilateral and unilateral trade-related measures taken to address IUU fishing, including trade and catch documentation schemes and trade-restrictive measures that identify and sanction countries for perceived weaknesses in addressing IUU fishing.

I obviously recommend you read the original, in the meantime, I go over the Executive Summary to pick up, some key issues.

Key trade-related measures to combat IUU fishing fall into two distinct categories; trade restrictive measures (TREMs), sometimes referred to as “trade sanctions“ enacted by one or more market-states, and catch certification schemes, of which two specific variants (trade documentation schemes (TDS) and catch documentation schemes (CDS)) have been developed and implemented to date. This paper assesses the merits and limits of unilateral and multilateral approaches with regard to both types of instruments.

TDS have been used by a number of tuna regional fisheries management organisations (RFMOs) since the early 1990s. A key attribute of TDS is their capacity to detect flag of convenience (FOC) vessel operations. Trade measures taken on the basis of TDS appear to have led to trade in specific species from FOC states such as Bolivia or Honduras subsiding completely. The economic impact of these measures on FOC states has been limited since tuna trade bypassed these states both physically and financially.

The outcome has, however, profoundly influenced the IUU profile of global tuna fisheries; today, over 95 percent of IUU fishing operations in the most important tuna fisheries are perpetrated by legally registered and licensed fishing vessels, undertaking illegal activities such as misreporting or under-reporting of catches that can be eliminated effectively by well-designed CDS.

Multilateral CDS are operated by three RFMOs. These schemes provide a mechanism for certification (by the flag state) of the legality of the harvest of the species covered and are relatively simple to police and to enforce. These schemes—when well designed and implemented by relevant state actors along the supply chain—can be effective in eliminating under-reporting by otherwise compliant, registered, and licensed fleets.

Under-reporting of Atlantic bluefin tuna is believed to have fallen from double the total allowable catch (TAC) to close to nil when important market states—including Japan—started to enforce the relevant CDS. Imports of Atlantic bluefin tuna into Japan fell by 90 percent following implementation of the scheme. Importantly, there is a strong correlation between the introduction of the CDS systems and the beginning of recovery of affected tuna stocks.

In value terms, the price of illegal product under a CDS is diminished because it cannot be legally brought to market, severely reducing the financial incentives to engage in IUU fishing. Legally certified Patagonian toothfish has been shown to trade at prices 20–30 percent higher than non-certified product, and non-certified Atlantic bluefin tuna in the Mediterranean has been reported to lose 85 percent of its legal international market value.

While enforcement of a CDS is likely to cause short-term economic and social costs, the long-term economic and social impact of stocks recovering as a result are positive from both developed and developing country perspectives. Current impacts of multilateral systems are mostly limited to industrial fisheries and developed countries.

Only the EU currently operates a unilateral CDS, although a unilateral US system is poised to come online in late 2016. The EU system is paper based and does not operate a central data registry, impairing traceability and hence the exclusion of illegally harvested products from certified supply streams. No evidence of impact on trade has been detected since the system came into force. The US system is likely to differ from the EU system, notably by targeting at-risk species, and because of how data will be collected, submitted, and validated.

Unilateral CDS are inherently difficult to enforce since fisheries products may circulate through most of the supply chain without being covered by certificates. Most importantly, multilateral systems cover and protect entire fish stocks, while unilateral systems only partially cover many stocks. The potential for direct positive impact of multilateral systems on the sustainable management of individual stocks is therefore greater.

The EU also uses TREMs in the form of yellow cards (identification of non-cooperating countries) and red cards (ban on imports). Four countries have been red-carded since 2014. States can only become the object of EU trade measures in their capacity as flag states; port or market states that actively participate in the laundering of IUU products cannot be targeted.

These trade restrictions are applied broadly to all fish and all fleets of a particular country regardless of the IUU fishing that triggered the identification, which means they are more likely to have disproportionate impacts on small-scale fisheries. Small-scale fisheries are inherently unable to escape embargoes on their flag state, while industrial operators generally have the option of reflagging their vessels to avoid flag state-related restrictions.

The US has identified third countries involved in IUU fishing since 2009 in biennial reports submitted to Congress by the Secretary of Commerce. To date, none of these identifications has led to a “negative certification”—the equivalent of an EU red card. US TREMs can, however, be designed to target only fleets, species, and product types directly tied to the IUU fishing that has given rise to the identification.

This paper argues that the EU system of identifying countries is opaque and that the standards on which decisions to identify (or not to identify) specific countries are based are unclear. In the US, on the other hand, biennial reports to Congress provide detailed information on cited infractions, the reasons behind a country’s identification, and the reasons for an identified country’s positive certification.

The countries identified by the US and the EU are fundamentally different. Only three countries out of 51 identified appear on both lists. EU identifications are currently confined to Africa, Asia, the Caribbean, and the South West Pacific; 48 percent are small island developing states (SIDS). US identifications are more evenly distributed between world regions and target more developed fishing nations. The largest number of identifications is of South American countries, closely followed by EU member states, which represent 25 percent of all US identifications.

EU identifications appear to have pushed some identified countries to improve frameworks for fisheries governance, but there is no clear evidence as yet that this has translated into actual reductions in IUU fishing. It is also not clear what tangible effect the US system has had on IUU fishing because no sanctions have been implemented to date. More broadly, however, the impact of unilateral TREMs on IUU fishing, and hence on fish stocks, may in fact be greater than that of unilateral CDS.

A unilateral identification and sanctioning process is likely to be more effective in changing the behaviour of countries if they export significant amounts of seafood to the market imposing the sanctions. If soft flag, port, and processing states can be pushed, through the application of transparent and fair trade-restrictive measures, into becoming more responsible, the impact of unilateral TREMs could be substantial.

In finishing, the paper provides the following conclusions and recommendations.

RFMOs should be supported and strengthened so that they can continue to deliver and expand multilateral solutions to the problem of IUU fishing in shared fisheries. Unilateral end-market CDS may protect markets from sourcing a wide range of illegally harvested products, but because they close off only one market to IUU products, they may have limited overall impact on IUU fishing and the sustainable management of individual fish stocks.

Policymakers looking to improve the effectiveness of multilateral and unilateral CDS could consider focusing on the following:

1. Systems should be based on a technically sound design which achieves verifiable traceability and encompasses supply chain operators at flag, port, processing, and market state levels in an even-handed manner;
2. Systems should be designed around a central certificate (or data) registry spanning the full supply chain to achieve verifiable traceability;
3. Verifiable traceability requires online electronic submission and validation of data within a centralised repository at every step along the supply chain;
4. CDS ought to be risk based and apply only to fisheries suffering from established and serious IUU fishing issues.

Policymakers looking to improve the effectiveness of multilateral and unilateral TREMs could consider focusing on the following:

5. Ensuring that TREMs are as species- and product-specific as possible, in order to address IUU problems with precision and minimise undue economic and social impacts;
6. Ensuring there are clear standards regarding what constitutes IUU fishing, clear rules and procedures for the identification of countries, and transparent public records on dialogues with potential targets of TREMs;
7. Designing TREM provisions in a way that allows countries to be identified in their capacity as flag, coastal, port, or market states, and to be sanctioned in t hose same capacities;
8. Using regional trade agreements (RTAs) as an avenue for enhancing the regulatory coherence in the design and application of unilateral trade instruments. Eventually, governments could consider adopting a multilateral approach to TREMs, for example in the World Trade Organization (WTO).
A further focus for work could be how to improve the coherence, and eventual multilateralisation, of various CDS initiatives. In this regard, policymakers could consider the following:
9. New and existing unilateral schemes ought to devise means for mutual recognition and equivalence of their certificates. Systems could then be aligned. The merging of unilateral CDS would eventually produce de facto multilateral systems, which could then be opened up for expanded end-market state membership;
10. The international community could assess the feasibility of the development and operation of global multilateral CDS systems, designed to apply to specific species of fish in need of protection from IUU fishing throughout their global geographic range.